The new prices for the Japanese financial year, starting next month, are between $US115-125 a tonne while premium coking coal could net $US129/t according to media reports.

Bloomberg, citing Citigroup analysts, reported that the prices agreed to by BMA and Nippon Steel are between 58-62% lower than last year’s average contract coking coal export price to Japan of $US300/t.

Merrill Lynch said negotiations were close to settling BMA’s premium coking coal from its Peak Downs opencut mine in Queensland’s Bowen Basin at $US129/t, Dow Jones Newswires reported.

Despite the falls, market watchers believe the latest round of prices are favourable in the context of the current economic climate.

Last year’s record high coal prices were fuelled largely by a combination of strong demand and supply constraints.

Japan’s ministry of finance revealed the nation’s total coal imports dropped 8.7% in January to 16.12 million tonnes, with thermal coal only sinking 2.4% or 8.98Mt of that figure.

The first major deals for thermal coal were struck by Xstrata Coal and Rio Tinto with Japanese utility Chubu Electric at $US70-72/t last month.